Aerotel v. Telco Holdings and Macrossan’s Patent Application.

There were two combined appeals. One fell on the patentable side of the line and the other on the unpatentable side. Between them we would hope to devise where the line is drawn. Unfortunately is it not a bright line. Indeed, from the manner in which the two cases were analyzed by the Court, neither of them appears to be particularly close to the line. We still have a large gap of uncertainty.

 

The Aerotel Appeal

This part of the combined case fell on the patentable side of the line. Let us look at the system claim (claim 9).

A telephone system for facilitating a telephone call from any available telephone station, comprising:

• means for coupling a calling party station to a special exchange;

• memory means in the special exchange for storing customer special codes and prepayment information individual to each customer;

• means for verifying the calling party responsive to a code transmitted from the calling party station to the special exchange so as to verify that the code matches the special customer code in the memory means and the calling party has unused credit; and

• means for connecting said calling party station to a called station responsive to the verification.

 

The Court of Appeal incorporated this diagram into the judgement.

A conventional method of making a phone call involves the caller dialling the number of a called party. Conventionally, the call goes through a number of public exchanges along the route shown in dotted lines. A system of measuring call duration applied to appropriate rates computes the cost. If the caller has no account running from his station (e.g. is in a call box) he will have to pre-pay. The patentee’s idea is to have an extra piece of equipment which he calls a “special exchange”. The caller has an account with the owner of that equipment and deposits a credit with him. The caller has a code. To make a call he calls the number of the special exchange and inputs his code and then the called party’s number. If the code is verified and there is enough credit he is put through: the call will be terminated if his credit runs out.

The Court of Appeal considered it important to note that the system as a whole is new in itself, not merely because it is to be used for the business of selling phone calls. The Court acknowledged that the system could be implemented using conventional computers, but said the key to it is a new physical combination of hardware. Is the Court being disingenuous? There is nothing new in the hardware of the special exchange:

A skilled reader of the Patent in 1985 would have been able to implement the described special exchange using an electronic control exchange of the kind that was available in the UK and elsewhere at that time.

The Court appears to see a novel hardware combination in the extra exchange in place of the dotted line. But how is this different from the conventional route by which “the call goes through a number of public exchanges” (with the “special exchange” being just another exchange in the route)? Is it novel hardware because two end-to-end connections are set up to and from the “special exchange”? Or is the dotted line slight-of-hand? Surely the only novelty of the hardware lies in the “special” nature of the special exchange (plus the fact that it is not a public exchange), in which case the novelty lies in the software within the box? It is difficult for patent applicants to invoke Aerotel as a precedent with such a flaw in the explanation. Or can one merely show the patent examiner a “special” box and aver that this shows that the system is new and should pass the third test?

Since the Court viewed the system as a novel combination of hardware, the Court saw no doubt in the fourth step and said “the system is clearly technical in nature”. If indeed there was a novel technical combination (aside from the mere “special” nature of one of the boxes along the route of the call), one could agree that there is no need to question whether it is “technical”. It is just a pity the Court did not consider novelty from a different starting point. If the Court had done so, the reader might be able to share the Court’s clarity on this crucial issue.

 

Macrossan’s Application

This application claimed a patent for an automated method of acquiring the documents necessary to incorporate a company. It involved a user sitting at a computer and communicating with a remote server, answering questions. By posing questions to the user in a number of stages, enough information is gleaned from the user’s answers to produce the required documents. Questions posed in second and subsequent stages are determined from previous answers provided, and the user’s answers are stored in a database structure. This process is repeated until the user has provided enough information to allow the documents legally required to create the corporate entity to be generated. A number of document templates are also stored, and the data processor is configured to merge at least one of these templates with the user’s answers to generate the required legal documents. The documents may then be sent in an electronic form to the user for the user to print out and mail to the end user or submit to the appropriate registration authority on behalf of the end user.

In the Patents Court, Mr. Justice Mann refused the application, holding that it: was for a method of performing a mental act as such; was not for a method of doing business; and was for a computer program as such. The Court of Appeal upheld the refusal, but for different reasons.

Step 1 of the structured approach (construing the claim) required no discussion in the judgement.

Step 2 calls for an assessment of the inventor’s contribution. That again presented little difficulty because the Applicant made no suggestion that he had invented any new kind of hardware. The inventive contribution was an interactive system which will do the job which otherwise would have been done by a solicitor or company formation agent. The method was described by the Court of Appeal as “for the very business itself, the business of advising upon and creating appropriate company formation documents”.

Step 3 asks “is the contribution solely excluded matter?” and, upon considering the scope of the business method exclusion, the Court of Appeal concluded it was.

While the 4-step structured approach does not require consideration of the 4th step if the 3rd step fails, the Court of Appeal considered it anyway and concluded there obviously is nothing technical about the contribution beyond the mere fact of the running of a computer program.

Turning to the “computer program as such” objection, the Court of Appeal summarily upheld the refusal by the Patent Office and the Patents Court:

"Applying the structured test, again there is no difficulty over step 1. Step 2 – what is the contribution? – is again straightforward. It is to provide a computer program (in practice probably an interactive website) which can be used to carry out the method. The hardware used is standard and is not part of the contribution. Step 3 – is the contribution solely of excluded matter? – is again easy. The contribution is just the devised program up and running. Step 4 – is that contribution technical? – is again easy. No. So the exclusion applies."

 

 

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